Industrial Goods Sector

Christian Fleming, MDAlexandra Smith, Analyst

Kairavi Mehta, AnalystVani Patro, Analyst

Company Description

Caterpillar Inc. manufactures, remanufactures, and provides logistical services for many industries. Caterpillar offers tools and machinery for heavy construction, forestry, excavation, and systems and solutions for the marine and petroleum industries.

Caterpillar Inc. – Capital IQ

Company Sectors

Construction Mining Engines and Turbine

Company Basic Information

Company Name

Caterpillar Inc.

Ticker CAT

Current Price (11/04/12)

$85.79 -1.86 (-2.12%)

52 week range

$78.25 - $116.95

Target Price $105.00

Google Finance

Historic Price Chart

Company SWOT AnalysisFavorable Unfavorable

Internal Strengths:•Leading market position•Strong portfolio of brands•Wide logistics

Weaknesses:•High debt to equity ratio

External Opportunities:•Acquisitions in capital intensive industries•Strategic alliances and investments•Growing presence in China and India

Threat:•Increase in raw material costs•Strong competition •Foreign exchange and interest rate fluctuations

Key Figures

Stock Analysis

Caterpillar Inc.

Komatsu Ltd. Industry

P/E Ratio 8.79 11.92 17.21

Market Cap

$56.1B $20.90B $907.9M

EPS 9.76 1.84

Beta 1.83 1.40

Growth and Margin Analysis

2010 2011 2012

Sales Growth

31.5% 41.2% 20.4%

Gross Margin

26.5% 26.2% 27.3%

Profit Margin

6.3% 8.2% 9.7%

2010 2011 2012

Sales Growth

28.7% 7.5% (2.2)%

Gross Margin

27.1% 27.3% 27.0%

Profit Margin

8.2% 8.4% 7.2%

2010 2011 2012

Sales Growth

22.1% 8.0% 10.4%

Gross Margin

12.8% 13.3% 11.8%

Profit Margin 5.4% 5.5% 3.9%

Machinery-Construction & Mining

Profitability and Turnover

2010 2011 2012

ROIC 6.3% 10.2% 11.1%

ROE 26.7% 40.3% 40.3%

ROA 4.1% 6.2% 7.1%

Total Asset Turnover

0.7x 0.8x 0.8x

Cash conversion cycle

111.0 107.0 121.2

2010 2011 2012

ROIC 3.5% 9.8% 10.1%

ROE 4.8.% 17.1% 17.4%

ROA 2.6% 7.1% 7.3%

Asset Turn

0.7x 0.9x 0.9x

CCC 176.8 149.0 171.4

2010 2011 2012

ROIC 5.9% 7.2% 9.4%

ROE 12.2% 13.7% 10.0%

ROA 3.4% 4.4% 5.8%

Total Asset Turnover

0.7x 0.8x 0.8x

Cash conversion cycle

29.4 32.1 31.3

Machinery-Construction & Mining

Leverage and Liquidity

2010 2011 2012

Debt/equity

56.0% 61.4% 58.7%

Debt/Assets

54.7% 54.4% 52.1%

Quick Ratio

0.8x 0.7x 0.7x

Current ratio

1.6x 1.6x 1.6x

2010 2011 2012

Debt/ Equity 251.2% 258.2% 222.2%

Debt/ Asset 82.3% 83.5% 80.2%

Quick Ratio 0.9x 0.7x 0.8x

Current Ratio

1.4x 1.3x 1.4x

2010 2011 2012

Debt/ Equity 89.0% 59.1% 57.4%

Debt/ Asset 70.1% 62.4% 63.1%

Quick Ratio 1.7x 1.7x 1.6x

Current Ratio 0.9x 0.9x 1.0x

Machinery-Construction & Mining

Analyst Opinions

Recommendation

Buy 100 shares

1.Caterpillar has a low P/E ratio in comparison to competitors and industry with high earnings per share.

2.Analysts have deemed the stock overweight, indicating that it is out performing the industry

3.It has a history of immense growth, depicted by the revenue growth.